The leading Auckland mayoral candidates have expressed mixed reactions to John Key's suggestion that the Government could appoint commissioners to run the city if the council refuses to free up more land for housing.

Labour MP and mayoral contender Phil Goff claims the Prime Minister is playing a "blame game" with his "threats" to get involved directly with council.

"My own position is that yes, the city is going to grow and of course you've got to have some intensification, but it's rather too convenient to focus on zoning when there are other things within the scope of the Government to change that would ease the pressures on prices."

Mr Goff said although the Government was within its rights to implement policies that would be binding on council, he didn't believe it was the right option.


"I just think the approach from central government to local government ought to be a co-operative one."

Centre-right candidate Vic Crone said the Prime Minister's comments sent a strong message to council to act on the housing shortage.

"I'm not surprised that he's come out and said that, it puts the pressure on the council to step up and deliver.

"[The council] hasn't worked with communities enough to help communities understand what they would look like under intensification, despite knowing that this might be an outcome.

"It doesn't solve the supply chain issue ... to ensure we are building the right type of housing in terms of affordable and social housing."

Mr Key gave a strong hint yesterday that the Government could go as far as appointing commissioners to run Auckland if the council doesn't find a way to provide land for more housing.

"Mark my words," he told reporters after being asked about the possibilities for dealing with an unco-operative council.

The Government, which is under increasing pressure to rein in runaway house prices, will soon introduce a National Policy Statement (NPS) which will require some councils to relax restrictions on where houses can be built.

In a post-Budget speech to a business audience in Auckland, Mr Key provided further detail about the NPS on urban development, which is expected "in a week or two".

The policy is mainly targeted at Auckland Council.

Mr Key said that if land prices in any region were going up too quickly, the local council would have to free up more land.

"If they don't do that, they will breach the law," Mr Key said.

The statement would include specific thresholds for growth which would trigger a requirement to allocate more land for residential development.

Mr Key would not reveal details about the thresholds, but Finance Minister Bill English has previously suggested that councils could be forced to act if the median house price reached 10 times the median income.

Questioned about the Auckland Council's ability to fund the new growth given high debt levels Key said "there were other ways to fund these things".

Asked if they should sell assets he said: "They could do."